Calls For Employment Shake-Up To Prevent ‘Uberisation’
MPs have been debating reforms to British employment law to prevent further ‘Uberisation’ of the economy.
The Financial Times reports that Labour MP for Birmingham Jack Dromey used the car-booking app service as an example of a tech organisation that has minimised its tax bills and avoided providing workers with a minimum wage due to the current legal definitions of workers, employees and employers.
A group of cross-party MPs met with senior tax accountants, academics and HR representatives to discuss the issue further.
Partner at Deloitte Mark Groom advised the committee that the current definition of employment in legal terms is ‘broken’.
“We have to ask whether we have got the definition of workers right,” he was quoted by the newspaper as saying. “Should it be about substitution, or should it be about control [of workers by a company]?”
Non MPs within the committee expressed their concerns collectively that the so-called gig economy in the UK is ‘seriously outdated’ and is enabling too many organisations to shrug off their tax-paying obligations.
Chairing the committee, Margaret Hodge MP said the group would be drawing up recommendations on how to deal with the problems the gig economy poses on the British tax system.
As well as Uber, the discussion also included McDonald’s and whether it is incentivised to employ workers on a part-time basis. The debate also brought up food delivery service Deliveroo, which successfully argued that its couriers are self-employed, as they have the right to ‘substitution’, where somebody else may carry out a delivery on their behalf.
Uber has responded to its challenge saying: “Drivers who use our app provide transportation services to passengers and will be registered for VAT if they meet the threshold set by government. This has been the case across the taxi and private hire industry for decades. Black cab drivers, and apps they use, operate in exactly the same way.”
Uber argues that as its drivers enjoy a flexible, self-employed role, they are only entitled to the basics under British employment law such as health and safety.
At present, the taxi service is submitting a request to appeal a decision by British tribunal which stated drivers are entitled to workers’ rights including minimum wage.
Uber has taken its appeal to the Supreme Court.
Jolyon Maugham, a tax barrister who has taken Uber to court over its VAT history, told the all-party committee that the rules around employment and tax status have to be re-examined.
“VAT, NICs and employment rights all hinge on employment status,” he was quoted as saying. “Legislation around this was formed in the 1890s. We have not tested whether [these rules] remain relevant. Tax laws will remain in a terrible muddle while these are unexplored.”
Maugham added that if decision-makers were too slow to act on this matter, they run the risk of appearing as an establishment that is not interested in creating a level playing field for those ‘good employers’ who pay their taxes and look after their workers.
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